Day Trade Short on USD/CHF Retracement? – Trade Closed

Well that was quick! The Swiss National Bank came out with a statement basically saying that the Swiss Franc is “massively overvalued” and won’t take it anymore! (Check out the story on Bloomberg here.) Needless to say, that is Swissy bearish in a big way. Check out how my day trade played out!

The chart above pretty much says it all. So what could I have done better?

Well, the best solution is to have a direct line to the world’s central banks and have them let me know what and when they are going to announce something before they announce it to the world. Can someone please hook that up for me? Thanks! Haha

Of course, that is not possible and there was no way for me to know that the SNB was going to come out with that statement today. As a result my trade was triggered and I was VERY quickly stopped out.

Total: -70 pips/ -0.35% loss

Actually, the one thing I could have done better was to cut the trade off as soon as I found out the news shortly after my trade was triggered. But given that I only risked 0.35% of my account on this trade, I’m not going to beat myself up too much over that–I’ll just be sure to do cut out quick the next time I hear of a pending currency intervention. 🙂

So, that’s probably gonna be the only trade for this guy today, but as always, if I see a great setup I’ll be sure to share it on my Twitter and Facebook pages! Stay tuned and good luck in these wild markets!

Konnichiwa forex fanatics! We’re well into the Asia trading session and it looks like USD/CHF is forming a technical day trade setup for sellers to jump back into the strong trend lower. More USD selling to go?

On the 15 minute chart above of USD/CHF, we can see that traders are still trading in Greenbacks for Swiss Francs even as US politicians finally agree on a deal to raise the debt ceiling. This behavior is probably due to the US credit agencies most recent stance on the US; even though they hold US debt at the highest rating, they’ve given the US a negative outlook (check out more news at Freshpips.com’s USD section). It looks like this will continue to put pressure on USD against “safe haven” currencies–at least in the short term.

So, I’m short USD/CHF bias as it seems the Swiss Franc is the only real “safe haven” left, IMHO, and a pullback to the Fibonacci areas drawn on the chart above may be areas where sellers will jump back in strong. With stochastics showing oversold conditions, we may see the market move higher and retest that area.

If so, I look to short at the 38% Fib area as it lines up with the major psychological level of .7700. My stop will be above the 61% Fib and I will target the major psychological level of .7500. Since USD/CHF is hitting all time highs for the year, there really isn’t anything I can pinpoint as profit targets other than major handles.

Short USD/CHF at .7700, stop at .7770, pt at .7500

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

This trade structure has a potential reward-to-risk return of about 3:1, and because it is only a day trade, I’m knocking down my risk to 0.35% of my account.

I’ll look to hold this through today’s European trading session and I may close out before the ISM Non-manufacturing PMI number at 10 am EST. I’ll stay flexible as always, so if I do make any adjustments I’ll be sure to update on my Twitter and Facebook pages! Stay tuned and good luck!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.

About Pipcrawler

Every day, I try to find what I believe is the best looking short term currency trade setup for the upcoming trading day or week. If you're a forex newbie, it can be tricky trying to figure out how to look at charts and draw lines. My goal is help you understand the psychology behind price movements in the foreign exchange markets, so you can learn to analyze your own currency charts and trade on your very own. To help you understand my trading approach, please read about my trading framework.

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